Tuesday, December 4, 2007

Cuba's economic growth

Cuba is expecting ten percent economic growth this year, which is a surprising figure, but less so if you consider that Cuba changed its method of calculating gdp a few years ago. Now, Cuba includes in its annual accounts the value of health care and other social services as if they were transacted in a market economy, a practice that inflates annual gdp. According to the Reuters report cited above, Cuban officials explain that industrial and farm production increased, while tourism declined and sugar output was flat.

What may be more surprising is that the U.S. government also has high estimates for Cuba’s growth: 11.1 percent last year. There is no explanation behind the U.S. figures, but one can assume that Venezuelan oil and continued high minerals prices (nickel is still trading at more than twice the price of two years ago) play a part.

There are two recent reports about Cuba getting breaks on bilateral debt. Mexico’s new ambassador, appointed by President Calderon, hopes that renegotiation of Cuba’s $500 million debt can be completed this year as part of an improvement in relations. And Russia’s parliament is approving a September agreement that restructured Cuba’s post-Soviet debt, valued at $166 million, according to Novosti. (The same report says the Soviet-era debt is $26 billion. If memory serves, when that debt was first mentioned to Fidel Castro, he said that if there is debt to be paid, then Russia should pay Cuba for the economic damage done to the island when the Soviet Union collapsed abruptly.)

And then there’s a somewhat breathless report from the University of Miami that, “quietly and behind the scenes,” European banks are “resuscitating a near-bankrupt Castro regime.” (Yes, “near-bankrupt.”) They are doing so through “lucrative high-interest loans to the Cuban government” that are lucrative for the banks but not, one supposes, very “resuscitating” to Cuba given their high interest rates. Regardless, the amount cited in the report is $2.3 billion in loans in 2007, which amounts to about five percent of Cuban gdp (CIA’s estimate) – pretty small potatoes.

Cuba’s economy is certainly growing, but whether the growth is resulting in a difference in living standards is another matter. See the post, “Las nuevas matemáticas,” at Generacion Y, for a Havana perspective.

19 comments:

Agustin Farinas said...

Phil,
Let me reread this posting to see if I got it right. Cuba's economy is near bankrupt but they managed to grow by a whooping 10 per cent.
Boy, talk about a miracle of economics! Chile's economy (the most dynamic economy in Latin America) came nowhere near that growth but Cuba's economy even with the famous "blockade" managed 10 percent growth.
My wife just return from a trip to the island and she told me that from her previous visit 5 years prior, the economy seemed to had deteriorated beyond anything she could have possibly imagined.
She was hard pressed to even find toilet paper even in the hard currency stores or shoppings. But these marvelous marxist economists managed a growth of 10%
Next time my grandson wants me to read him a bedtime fairy tale, I have to look up those numbers in Granma and read them to him.

Fantomas said...

phil todas las figuras que salen de Cuba son mentiras... Cuba es un fracaso economico tu bien lo sabes, nada funciona, el pueblo no ve los logros economicos , de que estamos hablando?

sin libertad plena la economia pasa a un segundo lugar. No habra economia hasta que no suelten a todos los presos politicos y se permitan elecciones libres

BASTA DE ENGAÑOS PHIL YO SINCERAMENTE NO SE QUIEN PUEDE TENER DOS DEDOS EN LA FRENTE Y HACER CASO A TODO ESTE PAQUETE DE MENTIRAS COMUNISTAS QUE EMANAN DE LA HABANA

Phil Peters said...

Fantomas, no tengo mi propio estimado de la tasa de crecimiento de la economia cubana, y veras que dije que el nuevo metodo cubano de contar (y tal vez el viejo tambien) produce cifras un poco infladas. Pero te pregunto: el 11 por ciento de la CIA, esto es mentira comunista tambien?

leftside said...

Yeah the CIA has an army of economists, and trust me, they don't go around reprinting commie statistics by nature of habit.

So the truth is that Cuba is one of the fastest growing economies in the world - for four years running now. In fact, you can go back further into the mid to late 90s and early 00s, and find that Cuba performed better than most of the region during those times as well. Or better yet, compare it to those capitalist shocked counties in Eastern Europe. But yet every article that gets printed about Cuba points to a "slumping" economy or one "in shambles."

Agustin Farinas said...

"So the truth is that Cuba is one of the fastest growing economies in the world - for four years running now."
Sure it is, and the moon is made of cheese also, and the Easter Bunny comes in April, and Santa Claus brings toys in December.
If all of this is true, why isn't any of this reflected in an improvement for the life of the average Cuban according to Juventud Rebelde? Cuba is a basket case economy (why, a communist economy a basket case, isn't that a strange thing!) and nothing works and even the propagnada organs admit it.
But is very hard for a California socialist to see beyond the view offered by the "leftist rose colored glasses".

leftside said...

So Agustin, you think the CIA is lying? Why can't you accept the facts? I think you should take off your blinders.

And, of course, it is difficult to talk about improvements for "average Americans" sitting here in California, let alone "Average Cubans." But I can tell you that wages and pensions have gone up for most, electricity is no longer the problem it was, transport is coming around, amazing amounts of housing is being built and food becoming more available and cheaper. But lets talk about toilet paper instead...

futurero said...

leftside, I, a cuban who live in Cuba invite you to spend for at least a half of year with my salary, with my libreta, with my no-home, with my no-car, just with your feet and the camellos, just with your salary buying the pound of pork at 30 pesos, when your salary is about 400. You will go back to californa running with your feet knocking on your neck

leftside said...

Futerero, I invite you to Los Angeles where we have 80,000 persons without a roof over their head, where one million do not have any health care, where half the kids do not graduate high school and where the even the rich are unhappy with their lives. I invite you into the neighborhoods where only liquor stores, beauty stores and churches exist and someone gets shot every night. I know life is not easy in any developing country and that I, as a middle class America, have many things to be thankful for. I hope I do not offend. But I believe that any future of human beings lies with socialism and that Cuba (despite the many obstacles it has had to endure) is a model for all of humanity in living like brothers and sisters, not the lucky and unlucky. Only in Cuba have I seen human beings treat each other with the dignity and respect for justice that future life requires. Regards.

Fantomas said...

leftside I bet anything that you dont believe anything you stated in the previous comment. You are in castros payroll ...sorry bro
Con ese cuento a otro

llevatelo phil..no permitas a mentirosos en tu blog it gives your blog credibility a bad name

Anonymous said...

Why the CIA gives those figures is a puzzle. Unless they are simply reporting Castro's figures. It is not the first time the CIA puts out wrong information. Anyway, the fact is that, despite all those figures, things have worsened for Cubans, as far as the economy goes. They feel there is no improvement at all and worse, no hope. That is why more and more Cubans are trying to leave the island any way they can. It is a shame because Cuba is losing the best and most productive of its citizens.

futurero said...

leftside, I bet that more than half of those 80,000 persons without a roof are mexican immigrants and other latinos inmigrants, if they don't have a roof in the USA, imagine if they could have a roof in their country.
Left, the cuban-american community is one of most prosperous latin community in the USA,¿why? Imagine, they spend all their lifes tie to the state, when they see freedom and prosperity they prosper, cause they realize with their jobs, just with their jobs they can do that they can't before.
I apreciate your inviatition to visit LA, I wish I could some day...

Anonymous said...

I do believe that the consumerism enticed by modern capitalistic societies is the most important reason behind today's problems all over the world. Thus, I agree that Socialism or something similarly fraternal and measured is the only real sustainable fair solution.
Cuba plays an important role in the ecology of ideas. It keeps alive the notion of a poor country where resources are distributed with solidarity. That occurs in Cuba despite suffering a cruel embargo by its natural business partner that happens to be the most powerful country on earth. So far, Cuba has been the display of an egalitarian policy driven by an egomaniac will. A policy that takes a totalitarian system to be implemented. I usually don't have major problems accepting that, in the case of Cuba, good ends takes sometimes less than desirable means. Far higher has been the cost of the policies by the Latinamerican oligarchies to go nowhere, to fail even when it comes to produce a positive discourse because the only drive has been to keep things where they are. Due to hesitations about the quality of this means/ends trade-off, coupled with my fears and my poor capacity for sacrificing, I have done things like leaving the country. I mean, like escaping from Cuba once and forever. It happens that today I'm also hesitant, fearful and weak. Today, I feel like the poor Fantomas: desperate! Where the hell is going the 10% of growth! Where! CIA does make mistakes from its dark perspective: Bay of Pigs and Iraq. So, don’t trust CIA, as usual.
Why:
- Him planning el cinturón de café?
- Him doing cattle breeding?
- Him cutting down natural incentives to the farmer for producing?
- Him not building a productive infrastructure with the soviet's subsides?
- Etc, etc, etc …?
- Him not leaving on time?
- Him coming back?
Now it comes to my mind Gorky Avila, the "Porno para Ricardo" leader when he was asked why he is just criticizing but not offering any solution. "Solution me? Solution they! They are the only able to advance a solution! The have all the Power, the Absolute Power!"
It seems easy to experiment the future with others. But it sucks if one, despite some empathy and awareness, plays the guinea pig role.

leftside said...

Funny how right-wing Cuban Americans like Fantomas always seem to be the first to want to banish dissenting views from their midst...

Futerero, 30% of the homeless here are Hispanic (compared to being half of the City's population). Half are women.

Cubans in America have higher incomes mostly because they were richer and more skilled immigrants to begin with. More recent Cuban migrants are not that different in income from any other. Some Miami and Hialeah neighborhoods have average household incomes of less than $25,000. Miami is the poorest big City in the country and the housing crisis there rivals Los Angeles (something their Cuban Mayor denies even exists, while millions of housing dollars to his rich developer friends goes missing).

Cuba has a housing problem too, but somehow has the ability to better address it than the US. For example, Cuba has the same population as the state of Illinois. But in 1 year Cuba built twice as many affordable units (110,000) than Illinois built in 20 years (50,000).

Phil Peters said...

Lefty, welcome back. Last time you wrote, you said you were getting married, and I'm sure that everyone here, everyone, joins me in congratulating you and your bride.

Some of this discussion gets a little philosophical, but I'll say a few things.

Cuba's economy has problems, and its model is not my cup of tea, but "basket case" is way off base.

It's quite possible for an economy to grow while living standards do not; that happens here sometimes, and it can much more easily happen in an economy like Cuba's. Indeed it has happened in recent years.

I think the reader's comment about the loss of productive and energetic Cubans to emigration is right on the money. Hurts now, hurts in the future, and it's especially bad in light of the fact that Cuba's population is declining and getting older. It makes the need to improve productivity even more urgent.

leftside said...

Thank you Phil, we had a wonderful weekend...

I have to ask why you feel that economic booms can "more easily" be divorced from people's wellbeing under Cuban socialism than capitalism?? In the US, we have seen incomes and poverty rates be stagnant for decades, while prices for housing, health care, education, energy, etc. go through the roof. Excess (stock mkt, dot com, housing) profits invariably have gone to a small elite. Cuba does not have such problems, and the State redistributes all increased earnings back to the people through increased services. There may not be dramatic salary increases in Cuba (though there has been some), but Cubans see everyday problems getting addressed by the State. That a few regime opponents make complaints is really not the best measure...

As for losing its best and brightest to migration, Cuba fares better than almost any other developing country I can think of. Despite their unfortunate location 90 miles from the US, the proportion of Cubans who leave is smaller than many other countries. And of course, Cuba has an army of educated professionals backfilling skilled positions that most countries can not count on.

If you are talking about the entreprenuerial class leaving, there may be a point there. But, I doubt the leadership spends much time worrying about that.

Agustin Farinas said...

Leftside,
"Despite their unfortunate location 90 miles from the US, the proportion of Cubans who leave is smaller than many other countries".
So what percentage of the Cuban population of approx. 11,500,000 is 2 million who are currently out of Cuba?
And your wonderful socialism hasn't even been able to give the average Cuban a miserable and simple glass of milk a day? What, the cows came from the USA and because of the blockade they cannot have milk? Raul Castro himself on the 26th of July speech said the system is not even capable of giving the average Cuban a glass of milk a day! Not toilet papsr, MILK!!!And these fact after 48 years of communism! Yes, the system in Cuba works wonders! As Futurero said, you should spend some months in Cuba living as a regular Cuban and your happy feet will carry back so fast your feet would be smoking.
And as far as trusting the CIa with information related to Cuba? Please, these bumblering idiots and ignorants have been fooled by Castro more times than I can remember. Any information about Cuba from the CIA is worthless.

leftside said...

Agustin, first off, there are only 1.24 million Cubans in the US, according to the 2000 census - 300,000 of those US born children of migrants. Then there were something like 200,000 Cubans in the US in 1959, so we are maybe talking about a net migration of 6-700,000 or so since the Revolution. Not small potatoes, but lower than most other compareable countries in the region.

Sorry to have to the the CIA again, but your issues with them are your problem. They say Cuba has a net migration rate of -1.05. This compares well to Mexico (-2.65), Dominican Republic (-3.43), Dominica (-16.11), El Salvador (-3.81), Jamaica (-5.78), Panama (-.97), Puerto Rico (-1.54), Bolivia (-1.37)...

And with your milk "proof" are you agreeing with Raul that it is indeed the job of the State to assure every man, woman and child gets a glass of milk every day?? Certainly the Revolution could do this if it was deemed a priority. I mean they got everyone a new refrigerator... As it is, Cuba is one of the few places in the world where children receive free milk every day. The guarantee and subsidies are part of the reason there are shortages.

Agustin Farinas said...

Leftside,
the milk for children is not free, one needs to purchase it. You need to check your figures a little better. Milk is not available for purchase by adults after the age of 7. This is a disgrace after 48 years of Revolution. You may not find anything wrong with it (of course) but any government that cannot even assure a glass of milk for its citizens to buy is a disaster by any measure you wish to use. I am not agreeing with Raul on anything. No one spoke of free milk, what I said was milk for purchase with money, and that is not available for adults at any price unless you go to a shopping and use hard currency.
You can claim that the guarantee and subsidies are the reason for the shortages (not true) but I know that is not true at all. The reason for the shortages is simple. In Cuba in 1959 there were 6,500,00 cows and approx. 6,700,000 Cubans in the population. Today there are 11,500,000 people and the cows number 4,300,000. How did this stupid government managed to decrease the bovine population is anybody's guess but I can give you a good exmple I am familiar with. These idiots slaughtered the breeding bulls for meat comsuption! Is that simple and I know because we saw it in Las Villas province. It is not a figment of my capitalist imagination.
Why are the planting fields full of marabu? Why is a a country with enviable weather and marvelous pastures and soil does not have vegetables available for purchase and are rationed? Cuba is blessed with a tropical weather and 4 planting seasons and wonderful volcanic soil should be able to produce tons of vegetables just like it did prior to the disaster that befell us in 1959. Why does Cuba need to import sugar when it was the world's biggest exporter of sugar prior to 1959? Why does it have to import fruits such as pineapples from Colombia?
Socialist agriculture has never worked anywhere the communist system has been implemented. These are undeniable facts.
Even the Soviet Union with the world's largest area, had to import wheat from Argentina, Australia and Canada because it could not produce enough wheat for the domestic market. Why?
Here is another good example, the 2 Koreas.
North Korea a basket case economy. Has to rely on food shipments from the UN to feed its population, and had famine and thousands died of starvation (but they have nuclear weapons!) while South Korea is a net exporter of durable goods and all sorts of items from electro domestic items to cars, ships, Etc. Why the disparity? Both are Koreans, so is not a problem between two different etnic groups. Is not the weather, because they both live in the Korean peninsula.
What exactly is the difference here between these 2 countries? ? The System and nothing else. One is a free market economy and the other is a communist economy. When the Cuban govt. was forced to open the free markets in the middel of the 90's all of the sudden all kinds of vegetables and food appeared in the markets. Maybe there is a lesson here but I doubt if the dyed in the wool communists would notice. They don't see any further than their revolutionary noses.
And some of their counterparts and sympathizers in the USA, specially in the state of California, can't see that truth either.
Is the blinders, Leftside, is the blinders!

Agustin Farinas said...

Leftside,
there were never 200,000 Cubans in the USA prior to 1959. In fact you were hard pressed to find any Cubans in NYC when I was living there in 1960 so I cannot believe your figures. And in Miami there were a few thousnds but nowhere near this figure you quote of 200,000.
The mass emigration took place after the Revolution and not before 1959.